Wheeler Promises Waiver 'Transparency'

Despite Trump's Desire to Approve E15, EPA's Head Remains Uncommitted

EPA Acting Administrator Andrew Wheeler talks about the agency's mission during testimony before a U.S. Senate committee on Wednesday. (DTN file photo)

OMAHA (DTN) -- EPA Acting Administrator Andrew Wheeler was a United States Senate staffer at the time the 2005 and 2007 Renewable Fuel Standard laws were passed. Now he's in charge of implementing the law at a time when confusion reigns on small-refinery waivers.

Wheeler told lawmakers Wednesday he regrets that when he was involved in drafting the RFS law, Congress didn't work out all of the details on how small-refiner waivers would be handled.

"I wish we had spent a little more time on the details as we implement it," Wheeler said to the Senate Environment and Public Works Committee. "We're working on transparency."

He announced the EPA was creating an online dashboard to provide information about refiner waivers granted and the "circumstances" leading to the decision.

The agency announced in the latest RFS volumes proposal that it granted waivers in 2016 and 2017 totaling 2.25 billion gallons of biofuels, which equates to affecting roughly 800 million bushels of corn demand. The National Biodiesel Board estimates the loss of 300 million gallons of biodiesel blended, through waivers.

"We're looking to see what we can do toward making up the difference," Wheeler told the committee, although he provided the same answer as former Administrator Scott Pruitt: The agency is unsure it can reallocate gallons lost retroactively.

Wheeler also was asked about the agency's intentions on year-round E15 sales.

"We certainly have started the process," he said. "There are people who believe we don't have the authority. We are looking at that issue." He noted E15 is part of a "broader package deal" to include concerns from refining interests.

In recent weeks, President Donald Trump said his administration was "close" to approving E15. Pruitt said during a public appearance in recent months that he believed the EPA had the authority.

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Sen. Joni Ernst, R-Iowa, pressed Wheeler on his stated intention to follow the letter of the RFS law and the intent of Congress.

Ernst said the EPA granted 29 exemptions totaling 1.45 billion gallons of biofuels in 2017. Since the implied RFS volume for corn ethanol is 15 billion gallons, she said the waivers cut that number to 13.55 billion gallons.

"That's about 10% below the statutory requirement," Ernst said. "IF the gallons are not reallocated somewhere, then you're not implementing the RFS' original intent."

Wheeler responded, "Part of the (congressional) intent also was to issue waivers. We were sued twice for not doing that and lost."

Ernst countered, "There also is an obligation of 15 billion gallons. We have to figure out a reallocation strategy."

As part of his opening testimony to the committee, Wheeler emphasized a need at EPA to provide regulatory certainty for businesses.

Sen. Mike Rounds, R-S.D., said part of that certainty includes implementing the RFS as written.

"It is critical the Renewable Fuels Standard be honored," he said. "People have spent millions (in investments in biofuels) with the expectation that they would be in the industry until at least 2022."

Rounds said he never received an answer to a letter to EPA in April, asking questions about the process used by the agency in granting waivers.

"I hope you would continue in the open process you're using," Rounds said. "You're taking care of the small refiners; you haven't taken care of the small farmers."

Part of the calls for transparency on waivers centers on the process and methodology used by EPA in granting the waivers. The RFS allows for waivers to small refiners who prove "disproportionate economic hardship." Two courts essentially said EPA cannot force small refiners to comply with the RFS if it would force them out of business.

Sen. Deb Fischer, R-Neb., said the law "does not define disproportionate economic hardship. By its definition, it is comparing the impact on a petitioner to one or more other refiners. All you have to prove is you are a small refiner and produce less than 75,000 barrels per day, and you have a foot in the door."

In 2016 and 2017, the EPA granted waivers in response to most of the requests received.

"Just because a company is a small refinery doesn't mean they should be entitled to an exemption," Wheeler said.

American Coalition for Ethanol CEO Brian Jennings said in a statement to DTN that farmers and ethanol producers need help on the waiver issue.

"While we appreciate Acting Administrator Wheeler is looking into how EPA might reallocate the SREs and intends to publicize a 'dashboard' to provide more transparency about the circumstances around why refineries receive exemptions from RFS compliance, farmers and biofuel producers are suffering the consequences of demand destruction and collapsed RIN (renewable identification number) and commodity markets," he said. "We need reallocation sooner rather than later."

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Todd Neeley

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